SINCE 2009 WATER DRAWING REDUCED BY 42%, WASTE RECOVERY INCREASED BY18% to 91% OF TOTAL

AVERAGE TRAINING 8.3 DAYS PER EMPLOYEE, BEYOND PLANNED GOALS

FONDAZIONE PIRELLI PRESENTS A JOURNEY THROUGH THE EVOLUTION OF SUSTAINABLE MANAGEMENT

Growth of revenues from Green Performance products, reduction of specific water drawing, increased rate of waste recovery, training days per employee beyond the targets of the industrial plan, new partnership with strategic suppliers for natural rubber, in support of producers of natural rubber and safeguarding bio-diversity. These are the main results of Pirelli’s Sustainability Strategy, broken down through the company’s various profiles: economic, environmental and social. Since 2009, the base year for the mid-to-long term sustainability goals that Pirelli set for itself, significant progress has been achieved in the development and realization of Green Performance products as part of the ever greater attention to the containment of environmental impacts deriving for the entire life cycle of the tyre, is the dissemination of a culture of safety and the support of employees and the outside communities in which the company operates.

In 2015, in particular, almost half (48% compared with 46% registered in 2014) of Pirelli’s tyre revenues came from Green Performance products, almost double the 2009 level when it was equal to 25% and above the target in the 2013-2017 sustainability plan which aimed at reaching the value only at the end of 2017. These results are the fruit of intense Research & Development Activities at Pirelli’s laboratories, aimed at the development of ever more advanced tyres at both the technological and performance levels, but at the same time able to ensure better environmental performances such as reduction of rolling resistance and noise, lower weight and greater endurance. The investments in Research & Development amount annually to over 3% of total revenues, one of the highest levels in the sector, and in 2015 they totaled about 215 million euro (3.4% of total revenues) an increase from 205.5 million euro in 2014 and 133 million euro in 2009.

Among the most significant results of the company’s commitment to the safeguarding and protection of the environment is the reduction of water drawing: in 2015, in particular, Pirelli registered absolute water drawing slightly above 11 million cubic metres, with a reduction of specific drawing of 3% compared with 2014 and 42% compared with 2009. Thanks to the effort of all production sites worldwide, from 2009 to today the water savings have totaled 30 million cubic metres: a quantity only slightly lower that the Pirelli’s group’s absolute drawing over three years. Over the course of the year, further, the rate of waste recovery rose to 91%, with an increase of 1% compared with the prior year and of 18% compared with 2009.

With 20 factories worldwide, employing around 37,000 people, Pirelli has a long tradition of initiatives in favour of internal communities and the local communities where it operates. Among the former, personnel training occupies an important place, and 2015 saw an increase in the average number of training days per person to 8.3, compared with 8.2 days in 2014 and 7.2 days in 2013. A figure, which for the third consecutive year, exceeds the 7 day per person target indicated in the 2015 industrial plan.

Commitment to training has contributed to a 6% improvement in the index measuring the frequency of accidents in 2015, which brings the improvement since 2009 to 73%. Overall, in the three year period 2013-2015 the company’s investment in health and safety has exceeded 40 million euro, of which over 25% was invested in 2015.

Interventions in favour of the communities where Pirelli operates, in conclusion, increased further, last year reaching 7.6 million euro compared with 6.1 million euro in 2014.

To disseminate the culture of sustainability, the Fondazione Pirelli – born in 2009 to promote awareness of the group’s cultural, historic and document heritage – is presenting an exhibit-journey through the evolution of sustainable management. As well, documents from the historic archives, recount the company’s history of sustainability: from the display of elements that constitute a tyre’s “rubber’s soul”, to historic photos underlining activities in favour of the environment and local farmer communities.

Targets of the sustainability plan and vision to 2020

Pirelli’s Sustainability Plan completes and supports the group’s industrial plan for 2013-2017 and provides a vision to 2020. Among the objectives already exceeded are the percentage of revenues from Green Performance products and training per employee. From now through 2020 it is estimated that the index of accident frequency, already reduced by 73% compared with 2009, results reduced by 90% thanks to ongoing investments in always safer machinery and courses in safety awareness for employees. At the environmental level, the following are expected – always comparing 2020 to 2009 levels – a reduction of 15% in CO2 emissions, a fall in specific energy consumption of 18%, a decline of 58% in specific water drawing and a rate of waste recovery above 95%. Further strengthening of the sustainable management system for the supply chain, which looks at economic, social and environmental sustainability criteria fully integrated into the processes of selection, collaboration and evaluation of Pirelli’s partners around the world, with great attention to the sustainability of the natural rubber chain.

Key awards

Pirelli has always been at the top of the main sustainability indices and has received numerous awards. In April 2015 and for the second consecutive year, the company won the “J.D. Power Original Equipment Award” in the Performance Sport category, while in June it received Ford’s “Green Pillar Award”. In July CNH Industrial gave Pirelli its “2015 Supplier of the Year Award” for its biomass power plant in Brazil and collaboration with the natural rubber producer Kirana Megatara. In November, Pirelli received Volvo’s “Quality Through Excellence Award” for its plant in Yangzhou, China, while in December Pirelli’s plant in Voronezh, Russia, received the “Ford Q1 award”. In April 2016, Pirelli received the “Reputation Award 2016”, attaining third place in the annual classification calculated by the Reputation Institute which measures consumer confidence in the company. Pirelli obtained 81.5 points, calculated according to seven different parameters, almost half of which (42.5%) regard sustainability factors.

PIRELLI TO INVEST A FURTHER 200 MILLION DOLLARS IN MEXICO OVER NEXT 3 YEARS, INVESTMENT SINCE 2012 RISES TO OVER 600 MILLION DOLLARS

NEW INVESTMENT WILL CREATE 400 ADDITIONAL JOBS

PRODUCTION CAPACITY WILL INCREASE TO AROUND 7.5 MILLION TIRES ANNUALLY

Pirelli to strengthen its position in Mexico by investing an additional 200 million dollars in a new factory, in addition to the existing car tire plant in Silao. The announcement – which comes four years after the inauguration of the Pirelli factory within the Silao “Puerto Interior” industrial hub, in Guanajuato state – was made on the occasion of Italian Prime Minister Matteo Renzi’s visit to the President of Mexico Enrique Pena Nieto, during celebrations at the Palacio Nacional, the presidential headquarters in Mexico City.

The new 200 million dollar investment will begin in 2016 and will be in addition to the 360 million dollars invested to date and the 50 million already earmarked for the 2016-2017. At the end of 2018, Pirelli’s total investment in the two plants in Silao will be above 600 million dollars.

The new plant, where production is scheduled to begin in 2017, will from the beginning employ the group’s most advanced technologies and processes. The Silao plant, built in 2012, has been focused from the start on the Premium segment, with production centered on High Performance and Ultra High Performance tires for cars and SUVs, for the local and all Nafta area markets.

Pirelli’s production hub in Silao, which covers 140,000 square meters, with an annual output at the end of 2015 of around 3 million tires, will boast an annual production capacity of five million pieces at the conclusion of the initial phases of investment. Thanks to the new 200 million dollar investment, which will permit the production of about 2.5 million tires, Silao’s total production capacity will reach 7.5 million pieces by the end of 2018. Further, with this additional investment the workforce, which today stands at 1,400 employees, is forecast to grow to over 1,800, beyond the already existing 400 ancillary workers. The hub is distinguished by its high standards in terms of processes and products, as well as its environmental sustainability and technical training, destined also for the other automotive facilities present in the Guanajuato area thanks to the support provided by the Instituto Piero Pirelli.

The new investment confirms the importance of Mexico among Pirelli’s international operations, also thanks to its strategic position which has made it in recent years the ideal base to significantly develop Pirelli’s presence in the Nafta area, a market which has been confirmed as one of the most promising for the success of the Premium strategy. In 2015, Premium sales in the region grew by 24.3% and accounted for 90% of the total at the local level. Overall, last year the area registered sales of 861 million euro, an increase of 21.7% (+4.1% net of forex effects) and representing 13.7% of total group sales, up from 11.8% the prior year, levels above the forecasts contained in Pirelli 2013-2017 industrial plan.

In Nafta area the Mexican plant supports the production hub Pirelli has had since 2002 in the USA in Rome, Georgia. Pirelli aims to strengthen its collaboration with its main original equipment partners, to support the launch of new lines especially developed for clients in the area – like the Cinturato P7 All Season Plus, the Scorpion Verde All Season Plus and the Pzero All Season Plus – and to increase the weight of sales in the Replacement channel also thanks to the expansion of the FasTrack network, the growth of retail and geomarketing, capable of optimizing the management of customer inventories.

Pirelli

Founded in 1872, Pirelli is one of the world’s major tire operators in terms of sales. With a commercial presence in more than 160 countries, the group counts 20 production sites in the world and employs about 37,000 people. Pirelli is also a leader in the production of high and very high end tires, thanks to its commitment to R & D, an area in which is annually invests about 3% of revenues, one of the highest levels in the tire sector, with the goal of constant improvement of performance and safety and the containment of environmental impact. Present in sporting competitions since 1907, Pirelli is the exclusive supplier for the World Superbike championship and many prestigious single marque championships, but above all of the Formula 1 championship for which it has been the sole supplier since 2011.

On December 16th, Pirelli received valuable recognition from Confindustria Romania for its Corporate Social Responsibility work.

The Chairman of Confindustria Romania, Mauro Maria Angelini, on the occasion of the first Excellence Awards Gala was keen to highlight with an award the outstanding results delivered by Pirelli through its work in Romania.

Pirelli has launched numerous projects and partnerships in the Slatina area; some of them, such as the Intercampus Slatina Project, specifically focus on children, whereas others promote exchange and collaboration partnerships, such as that between the Niguarda Hospital in Milan and the Slatina County Hospital.

Pirelli has established relationships with both the Bucharest and Craiova University hubs, focusing on technological innovation and spreading Italian culture in the Slatina area. Pirelli’s presence and work in Romania is bearing fruit.